Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Apple Inc. (AAPL): The Company Needs to Do More Than These Three Things

Apple Inc. (NASDAQ:AAPL) has been giving bulls fits in recent months, and everyone seems to have the secret recipe of what will get the world’s most valuable consumer tech company back on track.

Apple Inc.

ISI Group analyst Brian Marshall was on CNBC, boiling down what Apple Inc. (NASDAQ:AAPL) needs to do regain its swagger to three simple points:

Apple Inc. (NASDAQ:AAPL) needs to put out a 5-inch iPhone to compete against Samsung’s Galaxy S4 and other Android handsets that make the iPhone 5 seem puny in comparison.

There has to be a low-cost iPhone so Apple Inc. (NASDAQ:AAPL) can compete in overseas markets where the company’s market share is much lower than it is here.

Apple Inc. (NASDAQ:AAPL) needs to become more aggressive in returning cash to its shareholders.

Putting three bullet points on the firing line
The latest reports out of Asian suppliers aren’t very encouraging in tackling the first point. Sources are telling The Wall Street Journal that production on the next iPhone will begin this quarter for a summertime launch, but the new device is the same size as the iPhone 5.

Marshall warns that every manufacturer outside of Apple Inc. (NASDAQ:AAPL) at the Mobile World Congress earlier this year had a 5-inch smartphone to show off. Apple may be a year away with a response if it lets this window slip away.

The low-cost iPhone is more likely to happen this year. The chatter is growing, and countries where wireless carriers aren’t willing to fork over more than $300 in subsidies need a cheaper solution badly. The big challenge for Apple is to get the balance right.

When the market wanted a cheaper iPad, the iPad Mini wound up cannibalizing sales of the larger tablet at a price point 34% lower than the full-sized iPad.

At a time when even the latest iPhone lacks features found in the latest Android devices, it’s not as if Apple can afford to scale back on the spec sheet.

As for returning more money to its shareholders, everyone outside of Cupertino is stumped why Apple hasn’t come through with a dividend increase. It has the money. It’s not spending it on acquisitions. The aggressive buybacks and dividend-hike announcement can’t come soon enough.

That might be enough to settle Apple bulls down, but is that enough? Apple could really be doing so much more.

Apple slices
Missing from Marshall’s three points is the need for innovation.

Marshall is bullish on Apple. He has a “Strong Buy” rating and a $600 price target. In order for Apple to get there it’s going to need more than a larger iPhone, a cheaper iPhone, and a fatter yield.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.